France Set to Announce Purchase of EADS Tankers Without A Competition

Last week Aviation Week military editor Amy Butler, in a for subscribers only Aerospace Daily & Defense Report (Vol. 226,Issue 24), broke a bit of news of which no one seems to have grasped the significance. Specifically Ms. Butler reported that:

Plans for French President Nicolas Sarkozy to make a big announcement next month at the Farnborough Air Show related to his country's own refueling tanker program have apparently fizzled out after recent events in the United States, according to industry sources.

Sarkozy was set to announce that Paris was planning to buy A330-based tankers assembled at the yet-to-be built EADS North America manufacturing facility in Mobile, Ala. The country has a need for new refuelers, though a procurement strategy hasn't been released.

If this report is accurate, it means that France planned to buy EADS tankers without a competition. And, they hoped that because the tankers would be assembled in the US, everyone here would overlook the fact that this once again proves the hypocrisy of French defense firms.

These firms demand that they be allowed equal treatment for US defense contracts. Yet, behind the scenes, they seek to deny American companies the same rights in their country. Ed Morrisy on the Hot Air blog had a good post on this issue in March.

This is not the first time the France did not allow Boeing to compete in a defense contract. When the France asked for proposals for an air transport contract in 2004 they stipulated that the aircraft proposed must be of European conception. This effectively barred Boeing from participating.

It should be noted that the German's procured A310 tankers from EADS, also without a competition. Granted, the A310s retrofitted for this role were already in service with the German Air Force. But, given that the A310s were originally procured without a credible competition, and that the tanker retrofit contract opened the door for EADS to get into the tanker business, the German's procurement actions should be viewed with some suspicion.

It never ceases to amaze us here at Tanker War Blog how the KC-30 team was able to brand themselves as the defenders of the free-market; while at the same time, labeling all Boeing supporters rank protectionists. Though, we sense that this is about to change.

A case in point is an op-ed that ran in Sunday's Washington Post titled "5 Myths About the Death Of the American Factory". Myth 2 was especially interesting:

U.S. manufacturers can save themselves by investing in innovation.

Okay, but how much are you going to invest? U.S. private-sector companies can't put as much money into technology and research and development as foreign governments do to build up their sectors. As the chief executive of a technology firm with whom I've worked for many years says, "We're the best company in the world, but we can't compete with foreign governments." Consider Airbus. The European Union has put more than $15 billion into building this aircraft company from the ground up. Whatever you may think about the recent U.S. Air Force decision to buy tankers from Airbus rather than Boeing, one thing is clear: Through its subsidies, the E.U. has managed to build a highly competitive aircraft industry. South Korea has put more than $12 billion into its semiconductor industry to similar effect, severely harming the U.S. semiconductor manufacturing base.

At Tanker War Blog we continue to contend that the US government has a duty to balance the promotion of free trade with enforcement of free trade. Competition works great, if the all participants play by the rules of the free market, and if all countries agree to hold free and fair competitions.

If US defense companies are not allowed to compete at Away games in certain EU counties, then our government should ban those countries' competitors from Home games here in the US. Such action is not protectionism; it is enforcement of free market rules.

Civil War at Airbus?

Business Week yesterday had an interesting article that indicates all is not well at Airbus. The article claims that tensions between the French and German operations at Airbus are running high, with workers in each country complaining they are suffering disproportionately as the company restructures.

News of the GAO decision to rebid the Air Force tanker contract has only made matters worse. The roots of the problem are many but Business Week lists the latest grievances:

French employees are grumbling that 2,000 Germans — brought to Airbus’s Toulouse, France, factory two years ago as “temporary” workers to fix problems on the troubled A380 aircraft program – are still there.

The French also say they are bearing the brunt of the so-called Power 8 restructuring plan to slash $7.5 billion in operating costs by 2010. As of March 31, Airbus’s German operations had achieved only 23% of their cost reduction target, while the French operations had achieved 39%.

The Germans, meanwhile, are unhappy because some work on aircraft cabins, until now done at a factory in Hamburg, has been shifted to Toulouse.

The article goes on to state that such in fighting has only deepened "the gloom at Airbus and its parent, the European Aeronautics Defence & Space Co".

Maybe we were too harsh in our commentary of the Air Force lawyers use of a quote from Lincoln. While not from the Cooper Union Address, the Lincoln quote, "A house divided against itself cannot stand," would be very appropriate.

Also, we hear some of the German workers have begun calling Thomas Enders, German CEO of Airbus, Uncle Tom instead of the more chummy Major Tom for his siding with the French. Whatever the cause, all is not well in Airbus's cabin.

Also, speaking of pent-up hostility, someone sent us a photo of a new Mobile billboard.(The company that put it up reportedly sells chicken fingers.) TAnchorman is on vacation right now, but we are sure he would have something to say to KC-30 supporters about keeping it classy if he were here.

EADS's Tanker: American as Apple Strudel

Like politicians running for public office, the KC-30's nationality seems to change with what ever constituency it is pandering to at the moment.

In case you missed it, last month EADS won an in-name-only competition to lease 14 tankers to the British Air Force for $26 billion dollars. (We will save our commentary for later on how crazy this price is even if it does include infrastructure, training and maintenance services. BTW: In the US we are buying 179 of them for $35 billion. Talk about king of all lease rip offs!)

The interesting thing is that when the British government names the contractors working on the tankers, which we are told are near identical to those the US Air Force wants to buy, Northrop Grumman is not mentioned:

The contract,...was handed to AirTanker Ltd, a consortium led by Franco-German group EADS which includes Cobham, Rolls-Royce and VT Group of Britain as well as Thales of France, the government said.

But some how that same plane is then marketed as America's tanker and has Northrop Grumman listed as the prime contractor here in the good old USA. As we have said on other occasions, "we couldn't make this up if we tried."

We at Tanker War Blog refuse to suspend our disbelief on the nationality of the KC-30, especially when the first of tanker scheduled to be deliver as part of the contract is currently sitting in a hanger in Germany just waiting for the resolution of Boeing's protest. (See photo courtesy of Northrop Grumman above.)

Any nominations for this first EADS tanker delivered to the US be named "The Spirit of Mobile"? It might be fitting given all the phantom Alabama jobs it is supposedly creating.